* Tycoon's Frontline to raise Knightsbridge stake to 70 pct
* Will transfer 25 newbuild contracts to Knightsbridge
* Creates major bulk player with 39 vessels
* Dry bulk dayrates seen rising in 2014
OSLO, April 24 Norwegian shipping tycoon John
Fredriksen agreed on Thursday to take over rival Knightsbridge
Tankers, creating a major operator of dry bulk
carriers with 39 vessels as the sector gears up for an expected
Fredriksen's unlisted Frontline 2012 unit, which
already owns 38 percent of Knightsbridge, agreed to hand over
newbuild contracts on 25 vessels in exchange for new shares that
will raise its stake in the firm to 70 percent, Frontline said
in a statement.
Fredriksen controls a further 3 percent of Knightsbridge.
Frontline will receive 62 million Knightsbridge shares in
two tranches, worth $777.5 million at Wednesday's closing price.
The dry bulk market has been depressed for years due to an
oversupply of vessels and weaker-than-expected demand, and
freight rates tumbled in the first quarter, squeezing
cash-strapped vessel owners.
But its fundamental outlook is strong and analysts expect
rates to rebound over the next few years, particularly on steady
iron ore demand and limited new vessel deliveries.
Dayrates for capesize vessels, among the biggest bulk
carriers, averaged $14,000 last year, close to twice their rate
in 2012, and analysts at Fearnley Securities see them averaging
around $18,000 this year and $27,500 next.
That would be a far cry from levels above $100,000 a day in
2007 but above Knightsbridge's targeted $15,000 break-even
The deal is also part of Fredriksen's plans to break up
Frontline 2012, moving various vessels into different entities
to create pure sector plays.
The firm recently sold gas carriers for a stake in Avance
Gas and listed the company following an initial
public offering this month.
The new vessels will be delivered by the end of 2016 with
five arriving in 2014, 14 in 2015 and six in 2016.
Frontline 2012 said it expected to distribute its
Knightsbridge shares to its own shareholders over time.
(Reporting by Balazs Koranyi and Ole Petter Skonnord; Editing
by John Stonestreet)